Should College Students Be Investing?

Investing.

It’s probably the last word on most college students’ minds. But should it be? Investing at such a young age can show large dividends later in life. And starting in college provides more time for those investments to grow.

Statistically, kids are likely to follow in what their parents do. So if the parents are into investing, the student might be more likely to. Or if the parent is smart about their money, the student will be smart about theirs.

If you’re a college student with debt (hello, student loans), it may be a good idea to get those paid off before risking your money. However, if you’re in a good place financially, start to think about your financial goals both now and in the future. (We’re big believers in writing out your financial goals before taking any financial action.) Unless of course, your debt is low with a lower interest rate – in that case, you may be ready to go ahead and invest.

Why start now?

New investors can focus on making smaller, fixed investments on a regular basis, such as every month or quarter. With this strategy, you can get started with a small amount of money, keep extra funds in your bank account for emergencies, and reduce your overall risk by spreading out your purchases instead of trying to time the market. Spreading out your investment choices can reduce risks and increase returns.

But when will I actually see that return?

The tricky part is the instant gratification that college students may be looking for. Sure, investing now can show some big numbers 30-40 years down the road, but what does it do for them NOW? Short-term investments are a great solution to this problem. You learn how to begin investing, and you see the results sooner rather than later.

So the quick answer is yes. If it’s possible and reasonable for a college student to begin investing they definitely should. It will pay off big later in life. Even if you don’t have the money now to begin investing, take the time to learn more about it so you’re ready to invest when you DO have the money.

Interested in learning more about investing now for your future? Let us know! We’d be happy to help.